OAG report paints a bleak picture of the country’s fiscal governance

Narayan Prasad Ghimire

  • Read Time 3 min.

Kathmandu: If there is something often repeated in political speeches and government documents in Nepal, it is ‘good governance’. But, the media reports coming daily and even the periodic reports by the government bodies have shown the opposite—bad governance has afflicted the system.

Last Friday, the Office of the Auditor General (OAG) unveiled its report of the fiscal year 2019/20, showing huge arrears- total Rs 418.85 billion to be recovered by the government. It was hefty spending but not recognized by law. Several purchases lacked proof. There was no billing. It is sheer financial irregularity. As per the report, in the given fiscal year, the arrears grew by Rs 530 million.

The faulty spending behavior has plagued our political sphere and bureaucracy and it’s difficult to wipe out their nexus to ward off such financial anomalies.

For any spending by the public offices including the ministries, departments, corporations, adherence to certain laws and rules is mandatory. But the report clearly indicates how the laws were disobeyed, creating anarchy in financial administration.

Who has a major role in such non-implementation of laws and rules? It is obvious that those in power/government along with bureaucracy, the permanent government, are responsible for it. The report shows how the ministries went extravagant to enfeeble the State treasury. Misuse of State coffers mounted. Undoubtedly, it will discourage the taxpayers.

The OAG prepared separate auditing reports of the activities carried by the local level, provincial governments and federal government. It is one of the most comprehensive reports that brings financial facts and also recommends measures to various sectors of government. It has made aware the stakeholders involve in public spending of the values of transparency and public accountability.

This time, OAG has come up with new report- separate report on Covid-19 financial management. It is another interesting area of auditing as the management of Covid-19 had drawn huge criticism in view of financial irregularities. Then, the media were rife with the news about the mishandling of Covid-19 – irregularities in medical purchases.

In the wake of gradual implementation of federalism in place with the three-tier of elections and three-tier of governments, people piled hope on the system- from smooth and prompt service delivery to initiation and acceleration of development activities. The local governments were hailed and hoped of delivering public service at people’s doorstep. It was expected to free the people from the sufferings of a unitary system where even the financial authority and development works were guided by the center.

To everyone’s dismay, the financial conduct of local levels, where it has been devolved financial, legal and administrative rights with new form of governance, has been exposed with biting reality- double the arrears of provincial and federal government as compared to the total spending! The OAG’s 58th report mentioned that among the total financial transactions, the arrears in federal government stood at Rs 2.86 percent (Rs 44 billion) while it was 2.74 percent (Rs 6 billion) in province government and 5 percent in the local government (Rs 40 billion).

The leadership now must be aware how the truth exposed by the report has dashed the public hope and eroded public trust on political parties and bureaucracy. Both the political and bureaucratic leaderships are in urgent need to revive effective and smooth public financial management and fiscal federalism from the shambles.

Reading the OAG report fully, it is fair to say that good governance is not mere jargon for political speech to provoke public and for official documents to lure readers, but is a common commitment and translation into action, especially the political parties and bureaucracy. Isn’t the OAG report a wake-up call for us?

Interestingly, as the OAG report covers the time led by the previous government, it is yet to see how the present government evaluates the report and makes its position. No political leaders who were in the previous government have spoken anything on such egregious financial aberration. Now, is the present government able to recover the arrears and committed not to repeating such recklessness and indiscipline that dented much the public financial management?   

It would be apt here to conclude with a tweet (Aug 22) by a noted leader of the ruling party, Nepali Congress, Sekhar Koirala: “The OAG has made public its report. The amount of arrears and irregularities is increasing. The current government should take initiative on the disposal of arrears and take action accordingly. If the government has will power, it can do both of these tasks.” RSS